Is The High Cost Of Transactions Justifiable For Western Union Forex Brokers?
Western Union has enjoyed a consistently successful run for a major part of two centuries, making it one of the oldest forms of payments in the financial markets. The company has been experiencing the shifts in the payments industry ever since the world started witnessing innovative changes to payments and currency transactions, and Western Union has been keeping abreast of all the changes to be still relevant for the modern user. Although Western Union does not seem to enjoy the once high penetration among global retail traders, Western Union is still adopted by a considerable amount of the general public for sending money to different parts of the globe. Western Union has set up its offices in more than 190 countries around the world and has a prominent presence in most major cities. Western Union’s large presence can be attributed to its success in the financial markets, but traders are increasingly switching to alternate forms of payment such as credit cards and online payment processors. Western Union still adopts the basic transaction principles that were adopted during the early days of its operations, which included sending money through telegrams for international payment settlements. In the modern era, Western Union uses online technologies and international partnerships with major financial companies for meeting international payments and debt settlements.
How Does Western Union Process A Deposit Or Withdrawal To A Forex Account?
Western Union acts as an intermediary to payments between a sender and a receiver, which works as a means to receive money from a sender from one part of the world and transmit it to the receiver at another part of the globe. Traditionally, Western Union had dedicated offices that required users to approach a local office to send and receive payments, which also enabled traders to send money to bank accounts. However, Western Union was more popular among the general public that didn’t have access to a bank account and the relative lack of branches in their geographic location. Today, Western Union facilitates payments and online transactions through its web portal, which operates in conjunction with its numerous subsidiaries and affiliate partners located across the world. Western Union users can now make an online payment using their credit/debit cards or through their bank accounts, which does help Western Union to remain active, in spite of in increased competition from its rivals.
The Reason Behind The Lower Number Of Forex Brokers Accepting Western Union
Nowadays, most traders have access to convenient payment platforms such as online payment processors, credit/debit cards, bank accounts, and other forms of local payments that make a Western Union payment tedious and cumbersome. Forex brokers accepting Western Union will be required to physically collect its traders’ funds and deposit it into the trading account, which involves unnecessary expenses and significant delays. For that very reason, Forex brokers purposefully discourage its clients from depositing or withdrawing funds using Western Union, or some brokers simply choose to ignore Western Union altogether. Western Union transfers also include a high cost of transactions, which not only includes high fees for initiating a transfer but may also include currency exchange fees and unfavorable rates. In comparison, online payment processors such as Skrill and PayPal have very competitive fees for online transactions, which will not only ensure lower transaction costs but also facilitates faster processing that guarantees to fund a trading account within seconds. Most online payment processors also enable its customers to deposit or withdraw funds through other popular means of payments, which further improves the flexibility aspect of using the popular payment methods. Another important drawback of a Western Union transfer is the lack of accountability for the source of funds. Regardless of the KYC norms or other identifying information collected by Western Union at the time of transferring funds, the company fails to enforce anti-money laundering laws that are specified by the IMF. A person can simply walk into a Western Union outlet and make a transfer to any person or deposit funds into a Forex trading account in any part of the world with relative ease. The relative lack of strict money laundering policies has attracted criticisms from several leading agencies in the world, which has put the reputation of Western Union in a spot of bother.
When Does It Make Sense For Using A Western Union Deposit For Forex Trading?
A Western Union deposit becomes relevant for traders that do not wish to disclose their personal credit card or other banking information to Forex brokers, thereby increasing the anonymity aspect of Forex trading. Western Union transfers also make sense for traders that do not have access to a dedicated credit/debit card or any live accounts at the popular e-wallets. In some cases, retail traders from remote parts of the world might find it difficult to fund their trading accounts through any of the conventional forms of payments, which does stipulate the need for alternate payment methods such as Western Union or other local fund transfer options. Even though a majority of Forex brokers deter their users from using Western Union, some Forex brokers have gone to a greater length of accepting a wide range of payment options to facilitate easy and convenient payment options for its traders. Therefore, it is possible to find a Western Union FX broker that not only accepts a Western Union payment but may also help traders to make a withdrawal using Western Union. In some cases, brokers might also cover the costs involved in a Western Union transfer, particularly if the amount of transaction is substantial. However, be warned that brokers might only waiver the fee of transactions for deposits, as withdrawals will be charged as per the existing Western Union fees.
The Pros & Cons Of Western Union FX Brokers
We take a close look at some of the advantages and disadvantages of using Western Union as the primary form of making payments to Forex brokers.
- Anonymous Payment – Western Union prevents the need for any credit/debit card or bank account, which helps traders to make anonymous payments without conceding their private banking information to Forex brokers.
- Global Access – Western Union has an office in major locations in the world, and traders have the option of visiting their local Western Union office or partner to make a deposit or collect their withdrawal with ease.
- Currency Exchange – Western Union offers the option of converting one currency into any other currency in the world, which gives a fair idea of all exchange costs and the precise amount of capital that will be deposited into a trading account.
- High Cost – Western Union has high fees of transactions and huge exchange costs, which make it unfeasible for small retail traders. Alternate payment methods are relatively inexpensive and also facilitate convenient account transfer.
- Slow Processing – Western Union transfers may take days for cleared payments, which can have more delays if there are errors in sender/receiver information. Bank wires, which are considered to be the slowest Forex payment option, may involve considerably lesser time than a Western Union transfer.
- Limits On Payments/Transactions – There is a maximum cap on the amount of money that can be transferred through Western Union. Larger traders may be unable to use Western Union for either Forex deposits or withdrawals.
- Low Number Of Western Union FX Brokers – There are a limited number of options for Forex brokers that allow Western Union deposit for Forex trading. Even brokers that accept Western Union may discourage its users from using the payment option due to the tedious procedures involved.
- Regulatory Restrictions – Western Union may not satisfy all anti-money laundering laws as required by the different regulatory organizations, which does prevent Forex brokers from meeting its regulatory compliance. Therefore, Forex brokers have to avoid Western Union payments as a necessity.
- Unable To Reverse A Transaction – Although most online Forex payments, barring Wire transfers, can be reversed, Western Union transfers cannot be reversed. Once sent, the sender does not have the option of canceling his payment or lodging a complaint against a broker for misappropriation of funds.
What Are The Alternatives To Western Union Transfers?
There are several alternatives to Western Union payments such as other forms of local funds payments, but the traders are better off with the most adopted Forex payments such as Skrill, Neteller, PayPal, WebMoney, CashU, Credit/Debit Cards, and even Bank Wire Transfers. However, if you are really particular about using Western Union as an adopted form of payment, you may do so by browsing through our list of Western Union Forex brokers.